36 October/November 2023 October/November 2023 37
Of course it would be my
constituency colleague,
Micheál, because I’d be
afraid that if I was stuck on
on an island and he was
back home canvassing
the people of Cork Central
that would be something I’d
rather avoid
recognising there is there is a sacrifi ce
because of the job I have.
MS: What would you hope would be your
political legacy as minister for fi nance
and secondly at the end of your career
overall?
MMG:
Well I think you always want to leave
the economy in a strong position and leave
the fi nances in a position of real strength. I
will be laying out a plan for the management
of our fi nances over the coming years that I
would expect future governments to honour,
because we represent the right thing to do
and will really secure our future.
MS: And at the end of your career?
MMG:
That’s a long way away so far too early
to defi ne that.
MS: If you were stuck on a desert island is
your preferred company Micheál, Paschal
or Leo, and why?
MMG:
I will answer that one for you and you
might predict the answer but not for the
reasons that you would probably think. Of
course it would be my constituency colleague,
Micheál, because I’d be afraid that if I was
stuck on on an island and he was back home
canvassing the people of Cork Central that
would be something I’d rather avoid.
McGrath is but days away
from his fi rst budget but he’s
on top of his brief and cool,
except when it comes to
Health overruns.
The background is €65bn in budget surpluses
between now and 2026. However, the ESRI is
forecasting negative GDP growth of 1.6% for
the year and there was a shock fall in
corporation tax of €1bn in August, down 23%
in the third quarter of 2023. Meanwhile Sinn
Féin is expecting to wrest some of the levers
of budgetary power next year. Overall, it
seems likely McGrath’s budget will be
cautious, reducing taxes by €1.15bn including
lowering the lowest Universal Social Charge
rate from 2% to 1% at a cost of about €300m,
and the highest rate from 4.5% to 4%, and
increasing the wage at which the tax rate is
40% from €40,000 to €41,500, costing
€400m. There will be spending increases of
around €5.25bn, as well as a non-core
package of temporary spending, mostly on
Ukrainian refugees, Brexit and Covid of €4bn,
and a fi nal cost-of living package of perhaps
€3bn. It is likely to provide for social welfare
increases of only €12 weekly at a cost of
€350m annually.
McGrath is from, in his own words, a
“humble“ background. His father was a
labourer and he was the fi rst of his family to
go to university where he earned a fi rst-class
honours in his Commerce degree. Later he
worked as an accountant at KPMG where he
met his wife Sarah, also an accountant.
From 1999 to now he has climbed the
Fianna Fáil political ladder from Town Council
to which he was elected at just 23 years of
age, to County Council and then in 2007 into
Leinster House as a TD for Cork South
Central— a competitive constituency he
shares with his older colleague and party
leader Micheál Martin.
He walks a difficult tightrope of
simultaneous loyalty to Martin and the
demands of competing with his colleague to
retain the party’s second seat. In recent years
I think you will see, at a
minimum, a signifi cant
tightening as we get closer
to the General election and
it’s all to play for
he has been touted as a possible successor to
Martin.
McGrath is frequently described as
conservative on social and economic issues. He
was pro-life on the abortion issue but prefers to
defi ne himself as a “centrist” in political terms.
Some newspapers over the summer headlined
him as “ Mr Cautious.” This is hardly a surprise
as it is the default setting for a Minister for
Finance.
In my interview with him, I asked McGrath
about Health, indigenous industry, the public
fi nances and coalition with Sinn Féin.
Health
McGrath confesses to being “brassed off “ at the
seventh annual spending over-run in eight years
at the HSE, this time of an extraordinary nearly
€2bn out of a total budget package of€11bn:
“front line workers in the health service are
working in di cult circumstances. Spending
over-runs are a cause of great frustration”. It is
understood they have reduced the scope for new
health initiatives such as extending free GP care
and improving mental-health and disability
services, as well of course as scandalising other
more scrupulous government departnments.
There have been overruns in all the country’s
acute hospitals of 15-22%; infl ation in medical
supplies is 21%, rising to 31% in laboratory
supplies. McGrath warns that this all “points to
a need for reform at a whole lot of levels, not
least in their systems; and there’s an urgent
Heated on Health
Former Fianna Fáil TD Conor Lenihan grilled
the Finance Minister about topical issues
including HSE overruns
38 October/November 2023 October/November 2023 PB
need for an integrated fi nancial management
system in the HSE”. He insists health executives
must apply discipline to keep within their
budgets.
He tells me: “One of the frustrations I had
when I was Minister for Public Expenditure was
trying to get a handle on the underlying position
within Health because you had cash-based
reporting and then you had accruals-based
reporting. These were very diff erent and it
wasn’t always possible to get a tight
reconciliation so you could fully understand
what was the underlying position.
He also notes technology defi cits. “I do think
we have to invest in more in digitalisation and
we are undoubtedly laggards in that regard in
health services”. He considers that “accurate
and timely reporting of data is where you start
in getting a handle on expenditure patterns and
plans are now in place to invest in such a system
and that is an urgent reform that we need to
deliver quickly”.
I ask him how quickly, given that the HSE was
established to bring professionalism to the
provision of these services and he says “my
understanding is it will take a number of years”.
He thinks the new consultants’ contract will
help and he notes the di culties of Covid, the
increase in acute presentations in the health
system and general health-services infl ation. I
ask him if this means he’s saying it’s okay if the
HSE overruns next year but he is fi rm: “No we’re
certainly not saying that at all”.
Tax receipts
The Summer Economic Statement which set out
the parameters for the budget stressed the
perils of relying on the billions being thrown the
exchequer’s way by a small number of giant
multinationals. McGrath has spent the last year
tracing out three new initiatives that will take
these once-off tax receipts and use them for
continued construction of public infrastructure,
providing for the future pension needs of a
rapidly ageing population, and paying down our
massive public debt attributable to both Covid
and the fi nancial crisis that began in 2008. The
fact that he can aff ord these prudential plans is
testimony to the country’s continued success at
luring foreign direct investment (FDI).
“We need to ensure we’re not forced again
into what happened 15 years ago, where capital
expenditure was smashed by 60%. We need to
invest in infrastructure through the cycle - by
creating a contra-cyclical fund to smooth out the
investment cycle”.
These new funds are the product of the good
times and McGrath seems determined to put
them on a proper legislative footing so that they
cannot be casually raided by future ministers
when the economy takes a turn for the worse.
Advancing indigenous industry
McGrath is keen to recognise the end of the
Foreign Direct Investment bonanza years while
pointing to the threats out there in terms of
de-globalisation, demographics, climate
change and the competitive challenges of an
increasingly digital economy. In particular he
wants his budget to achieve a shift or
re-balancing in favour of indigenous small to
medium-sized enterprises. While reluctant to
give details, he is promising to make a big start
in this direction in this and his second budget
next year.
He told me, “the FDI will always be incredibly
important but I would hope that this budget will
signal a shift in terms of real focus as well and
the indigenous economy.
We really do want more of these very good
young businesses to scale up in Ireland and at
the moment many of them are choosing not to,
and we have to try to fi x that…If you’re an
entrepreneur with a high potential tech start up
do you choose Ireland as the place or do you go
elsewhere?”. In particular he plans that
“measures in the budget will try to incentivise
owners to grow companies that export more on
international markets”.
FF’s coalition prospects with SF
Michael McGrath seeks to pour cold water on
commentator opinion that seems to deem it
inevitable that Sinn Féin will be in government
after the next general election. “I think you will
see, at a minimum, a signifi cant tightening as
we get closer to the General election and it’s all
to play for”. To emphasise his point he states
that during the 2020 election campaign Fianna
Fáil was seen as a racing certainty but its strong
opinion-poll support dissipated in favour of
insurgent Sinn Féin. This is as close as a Fianna
Fáil member can get to admitting the 2020
campaign was a fi asco.
In 2020, Sinn Féin won 50% of its eventual
vote during the campaign itself - an
unpredictable result not even contemplated by
the party itself. The Finance Minister seems
again to tacitly admit the failures of the 2020
campaign by emphasising that in the next
election Fianna Fáil will be fi ghting on its own
and will not be “ruling in or out” possible
coalition partners in advance of the election. His
constituency colleague Micheál Martin took a
diff erent course in 2020 fi rmly ruling out any
participation with Sinn Féin. The party now
seems to be opening a door to that possibility.
Michael McGrath says this issue is not one of
personalities but rather policy compatibility. As
things stand he could not coalesce with them
because of their economic policies that would
impose signifi cant further tax burdens on both
individuals and companies. He clearly hopes
Sinn Féin will lose momentum “as it faces
greater scrutiny of its costings and promises in
the campaign”.
Conor Lenihan is a former Fianna Fáil Minister
and author of biographies of Charles Haughey
and Albert Reynolds. He spent 14 years in
Leinster House as a Dáil Deputy.
Overrun for yer will be between €1.5bn nd €2bn